Hot 877 is in stereo. The distortion i experience on the radio in one of my vehicles is weird. The signal is strong but the audio is distorted like an analog tuner off its mark a pinch. This issue is not affected by location either. However using a microbroadcaster for an mp3 player on the same frequency does *NOT* produce the same effect. Maybe the techies on here could hypothosize?
Without hearing it and by what you described, it sounds to me to be the transmitter itself is off frequency. Even though broadcast transmitters today are wide band it may need to be optimized towards the bottom part of the dial.
They don't operate flatly over the entire band and normally they are optimized before they leave the factory.
Mike